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Ken Keller: Question marks, understudies, paperweights and ATMs

Brain Food for Business People

Posted: June 23, 2010 4:55 a.m.
Updated: June 23, 2010 4:55 a.m.

Most everyone in business uses the term "cash cow" to describe a product or service that creates positive cash flow for the organization. Those same people don't often understand what the phrase means, and more importantly, how to apply it to their particular situation.

Decades ago, the Boston Consulting Group created a product-evaluation system to assess the viability of products that a business markets. In addition to "cash cow" there are three other terms used: question marks, stars and dogs.

The same type of process can be used to categorize and determine how people are contributing to an organization.

Most owners agree that in a work environment, some people are worth more to the company.

Some people are not worth as much, and as such, are paid less. Tom Peters, the author of "In Search of Excellence," once commented that "some people are worth more money and other people are worth a lot more money."

How does an owner categorize those who work for them without spending too much time yet be effective? Categorize employees according to productivity and potential using a system of question marks, understudy, paperweights or ATM.

Question marks are either a new employee or an employee who is unsure of his or her role in the company.

A new employee starts off as a question mark because they have been hired to fill a need, a desire for the company to take care of a task, an opportunity or a challenge. The cost of a new hire without experience or expertise is high. Even with years of experience elsewhere, it may be months before the person contributes to the profitability of the company.

In the meantime, the new employee is taking a salary, has added to overhead expenses and usually has other expenses the company must bear while the employee learns and starts to execute their job responsibilities and goals.

Longer-tenured employees may also be categorized as a question mark because the contribution they make to the company is unclear. That a long-term employee is in this category says something about the management.

"Question mark" is an appropriate moniker because the owner has to continually think hard about whether they want to continue to invest resources on a person who may or may not be capable of turning things around to make a contribution.

If a question-mark employee becomes successful, they can move to the category of understudy. An understudy is still a cost, but becomes ready to jump in when needed, although not always at the same level as a more seasoned and experienced contributor.

Yes, the understudy knows his or her lines, dresses the part and is available. But like the utility infielder on a baseball team, they don't play everyday.

They do have potential and represent the future of the business, but must be coached, mentored and guided to achieve their highest level of contribution.

The paperweight category refers to an employee who has limited uses and not much opportunity. What can be done with a paperweight?

Every company has paperweight employees. But without coaching and opportunity to transform this employee into something more, there isn't much of a future for this category of employee.

An ATM is seen as a place where money is disbursed. Those same machines are profit centers for the banking industry and for the places where an ATM is located.

Every ATM needs constant replenishing of cash to do its job well. So does this type of employee.

ATM employees produce a lot of cash for the company. While it is easy to assign the top salesperson to this category, there are likely others who qualify for this category, including those in production, purchasing and distribution.

However, too many businesses have just a limited number of ATM employees, which makes the business highly vulnerable to loss or lack of service.

In other words, if an ATM employee is not well-maintained and treated well, they are likely to move to the competition.

Observational research suggests the total cost of a having a full-time employee on the payroll starts at $80,000 a year.

What would the impact be on profits if a single employee categorized as an understudy was coached into becoming an ATM? What would it mean if a question mark made the transition to understudy in less time?

A simple evaluation of employees is well worth the time it takes to perform this categorization.

Ken Keller is president of Renaissance Executive Forums, which brings business owners together in facilitated peer advisory boards. His column reflects his own views and not necessarily those of The Signal.


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